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I know I told you earlier to rent, not buy. That is how you should get started. Rent until it is affordable
for you to buy. Use the principles in this book to determine the right time for you to purchase a home.
When you decide to purchase a home, the most important criteria will be price, mortgage, interest
rate, and down payment. However, please don’t forget to factor in taxes, insurance, and home
maintenance costs. Let’s take a quick look at my principle regarding your down payment.
Some lenders will give you a mortgage if you put less than 20 percent down. They will just charge
you more for it, and you will have to get private mortgage insurance (PMI), which is a significant
added cost to your mortgage.
Even if the lender doesn’t charge you more, you should still keep to the principle of putting down at
least 20 percent. This is an important component in making sure you don’t buy more house than you
can afford.
The rash of foreclosures over the past couple of years can be directly tied to homebuyers putting less
than 20 percent down on home purchases. The assumption was that home prices would continue to
rise. People who put small down payments on homes (as little as 3 percent) found themselves in deep
trouble when they couldn’t afford the house payments on a house that was worth less than the
purchase price!
Remember, the larger the down payment, the lower your monthly payment. The lower your monthly
payment, the easier it is for you to pay off your house—and paying off your house is your ultimate

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